Acas response to. consultation on Settlement Agreements Code

Acas response to consultation on Settlement Agreements Code June 2013 ACAS RESPONSE TO CONSULTATION ON SETTLEMENT AGREEMENTS CODE Introduction 1. A...
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Acas response to consultation on Settlement Agreements Code

June 2013

ACAS RESPONSE TO CONSULTATION ON SETTLEMENT AGREEMENTS CODE Introduction 1. Acas launched its public consultation on the draft settlement agreements Code of Practice on 12 February 2013. The consultation was seeking the public’s views on a new draft Code which is designed to support new legal provisions on the admissibility of settlement agreement discussions in unfair dismissal cases. It also sought answers to fifteen specific questions relating to the sort of issues the Code should cover. 2. The consultation period closed on 9 April 2013 and Acas is grateful to all those who sent in a formal response. The Acas Council has now had a chance to reflect on comments received and has produced a revised final version of the draft Code of Practice on Settlement Agreements which was sent to the Minister on 8 May 2013. A copy of the final draft of the Code is attached at Annex A. 3. The following paragraphs summarise the responses that were received on the consultation and explains the decisions that Acas has taken on revising the code in the light of the responses.

Responses to the consultation 4. There were 67 responses to the consultation. A full list of respondents is set out in Annex B. Of the 67 responses received:



17 from individuals (HR managers, consultants, individual solicitors)

 50 from organisations comprising:  14 employers  14 trade unions  18 legal bodies  4 others (charities, mediation bodies).

Question 1: Is it right that the Code should mainly focus on the new legal provisions regarding the inadmissibility of settlement agreement offers and discussions in unfair dismissal claims? Individuals Organisations Yes 7 36 No 1 11 Did not comment 9 3 5. A majority of those responding to this question agreed that the Code should focus on the new admissibility provisions set out in section 111A of the Employment Rights Act (ERA) 1996. Those in favour were not confined to any particular group with many employer organisations, most trade unions, professional legal organisations and individual HR managers agreeing that the Code should focus mainly on the new legal provisions. Amongst those who answered ‘yes’ there were differing degrees of emphasis on how exclusive the focus on the admissibility of provisions should be. For instance some said that the Code should also explain how the new provisions will sit alongside the current law, notably the ‘without prejudice’ principle, whilst others felt the Code should also set out how the new provisions will sit alongside disciplinary and grievance and performance management procedures. 1

6. Those who answered ‘no’ to the question were worried that too narrow a focus might encourage behaviours that ran counter to good people management and felt that some wider guidance on how settlement agreements should be used would be beneficial in a statutory Code (see also question 3). 7. A number of respondents said that the title of the Code, “Code of Practice on Settlement Agreements”, gave a misleading impression if the intention was only to focus on the narrow confidentiality provisions set out in section 111A of the ERA.

Acas response 8. Acas has decided to restrict the focus of the new Code mainly to the new admissibility provisions set out in section 111A of the ERA 1996 with the inclusion of some points of good practice. As regards the title of the new Code, Acas accepted that this needs to more accurately reflect the content of the Code and it has therefore decided to amend the title.

Question 2: Should the Code also include a reference to the statutory requirements for drawing up a settlement agreement? Individuals Organisations Yes 8 37 No 1 8 Did not comment 8 5 9. The consultation revealed strong support from all sectors for the idea that the Code should set out what is legally required to make a settlement agreement valid. The reasons given were largely that the Code should provide parties with as much clarity and certainty as possible about the legal requirements of using settlement agreements under the new provisions. 10. Those who answered ‘no’ to this question were not against the idea on grounds of principle but rather because they felt that including this information would be superfluous given that it was already widely available from other sources.

Acas response 11. Acas has decided to include information in the new Code on what parties need to do to make a settlement agreement legally valid.

Question 3: Should the Code contain good practice guidance on how settlement agreements are offered and discussed, in addition to this being covered in non-statutory guidance? Individuals Organisations Yes 8 25 No 3 23 Other 0 2 Did not comment 6 0

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12. Views on this were fairly evenly balanced with a slight majority in favour of including good practice guidance in the Code. Those in favour (which included most unions and legal organisations and some employers and HR professionals) felt that guidance would help to ensure fair play in what will be secret (protected) conversations. The inclusion of good practice was also seen as desirable to minimise the possibility of satellite litigation and to render the Code consistent with good practice as advocated elsewhere by Acas. The point was, however, made by a number of respondents that a one size fits all approach to guidance should be avoided. 13. Those against were concerned that including good practice guidance in the Code would blur the line between legal requirement and good practice. This, in turn, ran the risk of turning the negotiation of settlement agreements from a relatively flexible process into one that was more tightly prescribed.

Acas response 14. Acas is mindful of the need to allow flexibility for the parties to negotiate settlement agreements in a way that best suits their own particular circumstances. Acas also recognises, however, that the power balance will often be unequal when settlement agreements are discussed and that some good practice guidance in the Code can help to ensure fair play. Acas also took into account the concerns of some respondents that without the inclusion of some good practice, the Code could potentially mislead employers about the extent of the protection afforded by section 111A. For these reasons it has been decided to include some good practice principles in the new Code of Practice.

Question 4: What sort of information should be included in the nonstatutory guidance? 15. This question elicited a lot of responses with 57 individuals and organisations offering suggestions on what sort of information might be included on settlement agreements in non-statutory guidance. In addition to a general confirmation of the suggested topics for guidance outlined in the consultation document, a wide range of additional suggestions for issues to include in guidance were made including requests for more: a. guidance on the interaction between settlement agreements and other workplace procedures; b.

guidance on the tax and National Insurance implications of settlement agreements;

c.

guidance on how settlement agreements can be negotiated;

d.

guidance on a general good practice framework for discussing and negotiating settlement agreements;

e.

worked-up scenarios to illustrate improper behaviour.

Acas response 16. All of the suggestions made will be analysed by Acas and will be reflected as appropriate in the non-statutory guidance that will be published alongside the new Code.

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Question 5: Should the good practice recommendation to set out the initial details of an offer in writing be included in the statutory Code; and Question 6: If so what might be the likely impact of doing so on employers and tribunals? Individuals Organisations Yes 2 25 No 7 18 Other 0 4 Did not comment 8 3 17. Views on setting out initial offer details in writing were fairly evenly balanced with responses in favour and against coming from all sectors. Those in favour of putting offers in writing felt that one of the main advantages would be that it would provide a degree of certainty and accountability. Other benefits mentioned included that it might well result in more careful consideration being put into the making of offers, it would offer less scope for improper behaviour and consequent satellite litigation and it would make it easier for an employee and their adviser to consider the offer properly. A number of respondents also felt that putting the offer in writing would provide better evidence if matters finished up in the employment tribunal. 18. Those against were worried it would introduce too much formality into the process and could, inadvertently, make reaching an agreement more difficult in some circumstances where a less formal initial route may be more appropriate. Recording initial offers in writing it was felt would also not sit easily with the current practices for discussing compromise agreements initially in an informal way and might deter parties from using settlement agreements. 19. A number of respondents stressed that whilst it might not be helpful to put an initial offer in writing, the Code should nevertheless make clear that the final agreement would have to be set down in writing for it to be legally valid.

Acas response 20. Acas is anxious not to introduce inflexibility into the process for offering settlement agreements and has therefore decided to leave it open in the Code as to how offers are made. It has, however, been decided to make clear in the Code that even though an initial offer may be made orally the final agreement will need to be set down in writing.

Question 7: Having seen the draft of the new Code do you feel the template letters should be included in a) the Code or b) the non-statutory guidance? Individuals Organisations In Code 2 6 In Guidance 8 33 Other 0 7 Did not comment 7 4

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21. There was a strong preference amongst respondents across all sectors for including the template letters in non-statutory guidance rather than the Code. There were no employers, or employer organisations, in favour of including templates in the Code but there were a number of unions who were in favour. The reasons put forward for preferring to see the template letters in non-statutory guidance included: that organisations may be worried that they might be at risk if they did not use letters as set out in the statutory Code; that including them in the guidance would allow greater flexibility for employers to adapt the templates; it would avoid the possibility of satellite litigation around whether an employer had followed the template letter or not and; and it would make it easier to amend the template letters if this was necessary as a result of future changes in case law or practice. The point was also made that having the template letters in the Code might create the impression that oral settlement discussions prior to sending a letter would not be covered by the provisions of section 111A and may therefore deter employers from raising the issue orally in the first instance, which is currently common practice. 22. Those in favour of including template letters in the Code felt that this would provide greater clarity for both employers and employees, would help to ensure consistency of approach and would be particularly beneficial for smaller firms.

Acas response 23. Acas has decided to include template letters in non-statutory guidance rather than in the statutory Code.

Question 8: Do you have any comments on the wording of the template letters? 24. Fifty five respondents commented on the wording of the draft template letters. Three respondents were content with the wording of the templates as set out in the draft Code; the remainder expressed a wide range of concerns about the content and tone of the templates. 25.

Some of the main concerns expressed were:

a.

the templates are misleading as regards due process for any subsequent disciplinary action. There was a concern that as currently drafted the templates could suggest that a subsequent disciplinary process could be initiated without any prior investigation or performance management steps being taken and that this would be misleading about established principles for handling such matters fairly;

b.

the templates confuse disciplinary procedure with settlement agreement discussions and could therefore lead to a misunderstanding as to whether the letter constituted an invitation to a disciplinary meeting;

c.

the templates could discourage good management or actively encourage poor management practices;

d.

having three templates dealing with specific situations (performance, conduct and attendance) could mislead some into thinking that the use of settlement agreements is limited to only these situations;

e. the tone of the letters was perceived as not conducive to productive settlement discussions; 5

f.

The letters make no reference to section 111A and the protected nature of the settlement offer and discussions;

g.

The reference in the templates to a ‘lump sum free of tax’ is overly simplistic and therefore misleading.

Acas response 26. All of the comments on this question will be analysed by Acas and will be reflected, as appropriate, in any template letters that appear in the non-statutory guidance that will be published alongside the new Code.

Question 9: In referencing the importance of having a reasonable period of time to consider a settlement agreement offer should the Code specify a minimum time period? Question 10: If so how long should the period be? Responses to Q. 9 Individuals Organisations Yes 8 35 No 2 10 Other 0 4 Did not comment 7 1 27. There was strong support for specifying a minimum time period for considering a settlement agreement offer in the Code. Those in favour comprised all trade union respondents, most employer organisations, some legal organisations and the majority of HR professional respondents. 28. Arguments in favour were that having a minimum period would help guard against employees being put under undue pressure by the imposition of unreasonably short deadline and would help avoid litigation on what constituted a reasonable period to consider an offer. Those against the idea were concerned that specifying a minimum time period would be too prescriptive. Quite a number of respondents made the point that even if the Code did specify a minimum period it should also allow scope for the parties to vary this period by agreement. 29. On the question of how much time should be allowed, a sizeable proportion of individuals and organisations favoured a seven day period but there was also a significant number that felt that 14 days would be more appropriate. The group who favoured 14 days felt that seven working days was not sufficient time to consider an offer and more importantly obtain independent advice. 30. A number of respondents made the point that using calendar days rather than working days as a measure would be clearer. There was a concern that the use of working days could be confusing if an employee does not work a five day week, for instance an employee who works one day a week might argue that seven working days equates to seven weeks.

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Acas response 31. Acas has decided to include a specific minimum time period for considering an offer in the Code and to base this on calendar rather than working days. Acas was persuaded by the argument that using working days could be confusing. 32. On what the specific time period should be, Acas has decided to adopt 10 calendar days as the minimum. To avoid any confusion the Code now directly specifies that the 10 day minimum time period is to consider the formal written offer on which independent advice must be obtained.

Question 11: Do you think the statutory Code should contain a good practice recommendation that employees should be allowed to be accompanied at meetings to discuss settlement agreements? Question 12: What do you think are the implications of including such a reference to accompaniment in the statutory Code? Responses to Q11 Individuals Organisations Yes 7 23 No 4 23 Other 1 3 Did not comment 5 1 33. Views on whether the Code should contain a reference to employees being accompanied at settlement agreement discussions were almost evenly split between those in favour and those against. Those in favour felt that it was good practice to allow employees to be supported by a union official or work colleague at what is likely to be a stressful meeting and that a companion would be an important safeguard against any impropriety. 34. Those against were worried that allowing a companion to accompany an employee could result in the details or offers and discussions leaking out. There were also concerns that allowing a companion into a meeting would introduce a degree of formality to proceedings which would not always be helpful. Some expressed the view that the statutory requirement for an employee to receive independent advice on the proposed written terms of agreement will provide sufficient protection. There was also a concern that including accompaniment in the Code might suggest that this was a statutory right, which is not the case.

Acas response 35. After careful deliberation Acas has decided to include a reference in the Code to allowing employees to be accompanied at settlement agreement discussions. Allowing employees to be accompanied at key meetings which have a significant impact on their future employment has long been a feature of Acas’ good practice guidance and it is felt appropriate to continue this tradition in this latest Code. Acas does, however, recognise that there is no statutory right to accompaniment in settlement agreement discussions and this point is therefore highlighted in the Code.

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Question 13: What do you think of the examples of improper behaviour and undue pressure set out in the draft code and do you have any other examples that you feel might be usefully included? 36. Virtually all respondents commented on this question. A proportion of respondents (including 6 organisations from the legal profession) felt that the examples included in the consultation draft were generally sufficient. 37. A number of respondents, including most trade unions, felt that the examples given in the Code set the test for improper behaviour at too high a level and that to be fair to employees in particular impropriety should cover a much broader and more subtle range of conduct, including: not allowing an employee to be accompanied at a settlement agreement discussion; wider definitions of victimisation and harassment; and threats of physical violence or criminal behaviour. Some expressed a preference for the Code to define improper behaviour as ‘unambiguous impropriety’ (as that is understood in relation to the existing ‘without prejudice’ principle) plus an exhaustive list of other prohibited behaviours. There was some concern about the term ‘wrongful behaviour’ being included in the list, at least without further definition. 38. A number of respondents felt that more emphasis needed to be given to examples of improper behaviour from employees. The point was also made that the Code should make it clear the ‘whistleblowing’ under the Public Interest Disclosure Act 1998 would not constitute improper behaviour.

Acas response 39. Acas has considered the responses to this question carefully. Some changes included are that the Code now makes clear that what is currently regarded as ‘unambiguous impropriety’ in without prejudice cases would also be regarded as improper behaviour. The list of improper behaviours has also been expanded slightly to include all forms of victimisation and harassment. Acas does not, however, feel that it is feasible to provide an exhaustive list of improper behaviour. The best it can do is to provide an illustrative list of behaviours that would usually be regarded as improper.

Question 14: Should the Code include examples of what does not constitute improper behaviour or undue pressure Question 15: If so, what examples would you like to see included? Answers to Q14 Individuals Organisations Yes 6 19 No 2 23 Other 0 2 Did not comment 9 6

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40. Views on including examples of what does not constitute improper behaviour were evenly split for and against. Those in favour felt they would provide clarity and could avoid satellite litigation. Those against felt that including such examples could send the signal that some forms of pressure or inappropriate behaviour are acceptable. There were a number of suggestions made for examples of behaviour that would not be regarded as improper including: offering a settlement agreement prior to undertaking any other formal process; setting out in a factual and neutral manner the reasons that have led to the settlement agreement being proposed and the possible alternatives if agreement is not reached; refusing to provide a reference or pay for legal advice; and reasonably encouraging an employee to reconsider a refused proposal.

Acas response 41. Acas can see the merit in helping parties understand what is not improper behaviour when offering and discussing settlement agreements but is mindful of the concerns that giving examples in the Code could be seen to be tacitly encouraging the exertion of some pressure. It has therefore decided against including an extensive list of behaviours that would not be regarded as improper alongside the list of improper behaviour. Rather a few examples of what might not be considered improper behaviour are given in a separate paragraph (paragraph 19) and thought will be given as to how further assistance might be provided on the point in the non-statutory guidance.

Next steps 42. Ministers have now given their approval to the draft Code and a copy was laid in both Houses of Parliament on 13 May 2013. The Code will now lie in Parliament for 40 days after which, subject to Parliamentary scrutiny, the new Code can be brought into effect on a date to be specified by Ministers. The Government have already indicated that it is their intention to bring the new Code and the new provisions on settlement agreements into effect by the Summer of 2013.

Acas June 2013

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Annex A

DRAFT CODE OF PRACTICE ON SETTLEMENT AGREEMENTS (under section 111A of the Employment Rights Act 1996)

May 2013

Foreword The Acas statutory Code of Practice set out in paragraphs 1 to 24 on the following pages is designed to help employers, employees and their representatives understand the implications of section 111A of the Employment Rights Act (ERA) 1996 for the negotiation of settlement agreements (formerly known as compromise agreements) before the termination of employment. In particular, it explains aspects of the confidentiality provisions associated with negotiations that take place to reach such agreements. The Code does not cover all aspects of settlement agreements. Further guidance on settlement agreements can be found in the Acas booklet “Settlement Agreements: A Guide” which also offers more detailed guidance on the confidentiality provisions set out in section 111A. The Code is issued under section 199 of the Trade Union and Labour Relations (Consolidation) Act 1992 and comes into effect by order of the Secretary of State on xxx. Failure to follow the Code does not, in itself, make a person or organisation liable to proceedings, nor will it lead to an adjustment in any compensation award made by an employment tribunal. However, employment tribunals will take the Code into account when considering relevant cases. The discussions that take place in order to reach a settlement agreement in relation to an existing employment dispute can be, and often are, undertaken on a ‘without prejudice’ basis. This means that any statements made during a ‘without prejudice’ meeting or discussion cannot be used in a court or tribunal as evidence. This ‘without prejudice’ confidentiality does not, however, apply where there is no existing dispute between the parties. Section 111A of the ERA 1996 has therefore been introduced to allow greater flexibility in the use of confidential discussions as a means of ending the employment relationship. Section 111A, which will run alongside the ‘without prejudice’ principle, provides that even where no employment dispute exists, the parties may still offer and discuss a settlement agreement in the knowledge that their conversations cannot be used in any subsequent unfair dismissal claim. It is the confidentiality aspect of section 111A that is the specific focus of this Code. Throughout this Code the word ‘should’ is used to indicate what Acas considers to be good employment practice, rather than legal requirements. The word ‘must’ is used to indicate where something is a legal requirement.

The Code of Practice Introduction 1. This Code is designed to help employers, employees and their representatives understand the law relating to the negotiation of settlement agreements as set out in section 111A of the Employment Rights Act (ERA) 1996. In particular it gives guidance on the confidentiality provisions associated with negotiations about settlement agreements and on what constitutes improper behaviour when such negotiations are taking place. 2. Settlement agreements are only one way of handling potentially difficult employment situations. Problems in the workplace are best resolved in open conversations, including, where appropriate, through the use of performance management, or informal and formal disciplinary or grievance procedures.

What are settlement agreements? 3. Settlement agreements are legally binding contracts which can be used to end the employment relationship on agreed terms. Their main feature is that they waive an individual’s right to make a claim to a court or employment tribunal on the matters that are specifically covered in the agreement. Settlement agreements may be proposed prior to undertaking any other formal process. They usually include some form of payment to the employee by the employer and may also include a reference. 4. For a settlement agreement to be legally valid the following conditions must be met: a. The agreement must be in writing; b. The agreement must relate to a particular complaint or proceedings1 ; c. The employee must have received advice from a relevant independent adviser2 on the terms and effect of the proposed agreement and its effect on the employee’s ability to pursue that complaint or proceedings before an employment tribunal; d. The independent adviser must have a current contract of insurance or professional indemnity insurance covering the risk of a claim by the employee in respect of loss arising from that advice; e. The agreement must identify the adviser; f. The agreement must state that the applicable statutory conditions regulating the settlement agreement have been satisfied. 5. Settlement agreements are voluntary. Parties do not have to agree them or enter into discussions about them if they do not wish to do so. Equally the parties do not have to accept the terms initially proposed to them. There can be a process of negotiation during which both sides make proposals and counter proposals until an agreement is reached, or both parties recognise that no agreement is possible. Simply saying that the agreement is in “full and final settlement of all claims” will not be sufficient to contract out of employment tribunal claims. To be legally binding for these purposes, a settlement agreement has to specifically state the claims that it is intended to cover. 2 The independent adviser can be a qualified lawyer; a certified and authorised official, employee or member of an independent trade union; or a certified and authorised advice centre worker. 1

Settlement agreement discussions and section 111A of the ERA 1996 6. Section 111A of the ERA 1996 provides that offers to end the employment relationship on agreed terms (i.e. under a settlement agreement) can be made on a confidential basis which means that they cannot be used as evidence in an unfair dismissal claim to an employment tribunal. Under section 111A, such pre-termination negotiations can be treated as confidential even where there is no current employment dispute or where one or more of the parties is unaware that there is an employment problem. Section 111A can also apply to offers of a settlement agreement against the background of an existing dispute, although in such cases the ‘without prejudice’ principle can also apply. 7. There are, however, some exceptions to the application of section 111A. Claims that relate to an automatically unfair reason for dismissal such as whistleblowing, union membership or asserting a statutory right are not covered by the confidentiality provisions set out in section 111A. Neither are claims made on grounds other than unfair dismissal, such as claims of discrimination, harassment, victimisation or other behaviour prohibited by the Equalities Act 2010, or claims relating to breach of contract or wrongful dismissal. Throughout this Code there are a number of references to unfair dismissal. These references should be read in general as subject to the exceptions set out in this paragraph. 8. The confidentiality provisions of section 111A are, additionally, subject to there being no improper behaviour. Guidance on what constitutes improper behaviour is contained in paragraphs 17 and 18 of this Code. Where there is improper behaviour, anything said or done in pre-termination negotiations will only be inadmissible as evidence in claims to an employment tribunal to the extent that the tribunal considers it just. In some circumstances, for instance where unlawful discrimination occurs during a settlement discussion, this may itself form the basis of a claim to an employment tribunal. 9. Where there has been some improper behaviour for these purposes this does not mean that an employer will necessarily lose any subsequent unfair dismissal claim that is brought to an employment tribunal. Equally, the fact that an employer has not engaged in some improper behaviour does not mean that they will necessarily win any subsequent unfair dismissal claim brought against them. 10. Where the parties sign a valid settlement agreement, the employee will be unable to bring an employment tribunal claim about any type of claim which is listed in the agreement. Where a settlement agreement is not agreed, an employee may bring a subsequent claim to an employment tribunal but where this claim relates to an allegation of unfair dismissal the confidentiality provisions section 111A of the ERA 1996 will apply.

Reaching a settlement agreement 11. Settlement agreements can be proposed by both employers and employees although they will normally be proposed by the employer. A settlement agreement proposal can be made at any stage of an employment relationship. How the proposal is made can vary depending on the circumstances. It may be helpful if any reasons for the proposal are given when the proposal is made. Whilst the initial proposal may be oral, one of the requirements for a settlement agreement to become legally binding is that the agreement must ultimately be put in writing (see paragraph 4). 12. Parties should be given a reasonable period of time to consider the proposed settlement agreement. What constitutes a reasonable period of time will depend on the circumstances of the case. As a general rule, a minimum period of ten calendar days should be allowed to consider the proposed formal written terms of a settlement agreement and to receive independent advice, unless the parties agree otherwise.

13. The parties may find it helpful to discuss proposals face-to-face and any such meeting should be at an agreed time and place. Whilst not a legal requirement, employers should allow employees to be accompanied at the meeting by a work colleague, trade union official or trade union representative. Allowing the individual to be accompanied is good practice and may help to progress settlement discussions. 14. Where a proposed settlement agreement based on the termination of the employment is accepted, the employee’s employment can be terminated either with the required contractual notice or from the date specified in the agreement. The details of any payments due to the employee and their timing should be included in the agreement.

Improper behaviour 15. If a settlement agreement is being discussed as a means of settling an existing employment dispute, the negotiations between the parties can be carried out on a ‘without prejudice’ basis. ‘Without prejudice’ is a common law principle (i.e. non statutory) which prevents statements (written or oral), made in a genuine attempt to settle an existing dispute, from being put before a court or tribunal as evidence. This protection does not, however, apply where there has been fraud, undue influence or some other ‘unambiguous impropriety’ such as perjury or blackmail. 16. Section 111A of the ERA 1996 offers similar protection to the ‘without prejudice’ principle in that it provides that any offer made of a settlement agreement, or discussions held about it, cannot be used as evidence in any subsequent employment tribunal claim of unfair dismissal. Unlike ‘without prejudice’, however, it can apply where there is no existing employment dispute. The protection in section 111A will not apply where there is some improper behaviour in relation to the settlement agreement discussions or offer. 17. What constitutes improper behaviour is ultimately for a tribunal to decide on the facts and circumstances of each case. Improper behaviour will, however, include (but not be limited to) behaviour that would be regarded as ‘unambiguous impropriety’ under the ‘without prejudice’ principle. 18. The following list provides some examples of improper behaviour. The list is not exhaustive: a. All forms of harassment, bullying and intimidation, including through the use of offensive words or aggressive behaviour; b. Physical assault or the threat of physical assault and other criminal behaviour; c. All forms of victimisation; d. Discrimination because of age, sex, race, disability, sexual orientation, religion or belief, transgender, pregnancy and maternity and marriage or civil partnership; e. Putting undue pressure on a party. For instance: i. Not giving the reasonable time for consideration set out in paragraph 12 of this Code; ii. An employer saying before any form of disciplinary process has begun that if a settlement proposal is rejected then the employee will be dismissed; iii. An employee threatening to undermine an organisation’s public reputation if the organisation does not sign the agreement, unless the provisions of the Public Interest Disclosure Act 1998 apply.

19. The examples set out in paragraph 18 above are not intended to prevent, for instance, a party setting out in a neutral manner the reasons that have led to the proposed settlement agreement, or factually stating the likely alternatives if an agreement is not reached, including the possibility of starting a disciplinary process if relevant. These examples are not intended to be exhaustive. 20. In situations where there is no existing dispute between the parties, the ‘without prejudice’ principle cannot apply but section 111A can apply. In these circumstances the offer of, and discussions about, a settlement agreement will not be admissible in a tribunal (in an unfair dismissal case) so long as there has been no improper behaviour. Where an employment tribunal finds that there has been improper behaviour in such a case, any offer of a settlement agreement, or discussions relating to it, will only be inadmissible if, and in so far as, the employment tribunal considers it just. 21. Where there is an existing dispute between the parties, offers of a settlement agreement, and discussions about such an agreement, may be covered by both the ‘without prejudice’ principle and section 111A. The ‘without prejudice’ principle will apply unless there has been some ‘unambiguous impropriety’. As the test of ‘unambiguous impropriety’ is a narrower test than that of improper behaviour, this means that pretermination negotiations that take place in the context of an existing dispute will not be admissible in a subsequent unfair dismissal claim unless there has been some ‘unambiguous impropriety’. 22. In court or tribunal proceedings other than unfair dismissal claims, such as discrimination claims, section 111A does not apply. In these cases, the ‘without prejudice’ principle can apply where there is an existing dispute at the time of the settlement offer and discussions, meaning that these will not be admissible in evidence unless there has been some ‘unambiguous impropriety’.

What if a settlement agreement cannot be agreed? 23. If a settlement agreement is rejected and the parties still wish to resolve the dispute or problem that led to the offer being made then some other form of resolution should be sought. Depending on the nature of the dispute or problem, resolution might be sought through a performance management, disciplinary or grievance process, whichever is appropriate. The parties cannot rely on the offer of a settlement agreement or any discussions about the agreement as being part of this process. 24. It is important that employers follow a fair process, as well as the other principles set out in the Acas discipline and grievance Code of Practice, because, if the employee is subsequently dismissed, failure to do so could constitute grounds for a claim of unfair dismissal.

Annex B Responses to Consultation Age UK Association of Colleges Association of School and College Leaders ASLEF Avenues Trust Group

Marilyn Smyth (ER Consultant) Martin Searle Solicitors

Brian Clarke (Hospital Director) Brian Steele (Finance Director) Birmingham Law Society Brabners Chaffe Street LLP

Nicola Berry (Solicitor) Nicholas D Hart (Legal Consultant) Nita Hutchinson (HR Manager) North East Lincolnshire Council

British Retail Consortium Carol Jenkins (HR Manager) Chartered Institute of Personnel and Development Civil Mediation Council Cloisters Confederation of British Industry David Esplin (HR Manager) Debbie Cusick (HR Business Partner)

National Union of Teachers National Union of Journalists National Association of Head Teachers

Outset UK Ltd Penny Aspden (HR Director) PricewaterhouseCoopers LLP Prospect RBS Mentor Royal College of Midwives Royal College of Nursing

Department for Work and Pensions

Severn Trent Water Steve Cook (HR Manager)

Employment Tribunals (Scotland) Employment Lawyers Association Engineering Employers Federation Equalities and Human Rights Commission Ethnic Minorities Law Centre

The Conflict Resolution Centre The Law Society Thompsons Solicitors Trades Union Congress Transport for London

Federation of Small Businesses

USDAW UCATT Unison Universities and Colleges Employers Association Unite the Union

Graham Curling (HR Manager) GMB IBB Solicitors Joan Finch (ER Consultant) John Stamford (ER Consultant)

Weightmans LLP

Katherine Morehouse (HR Director)

Plus 4 respondents who wished to remain anonymous

Lea Caddick (H&S trainer) Lewis Silkin LLP Liverpool Law Society Local Government Association

www.acas.org.uk

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